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The DDT Effect: The case of Economic Growth, Public Debt and Democracy Relationship

Adom, Philip Kofi (2016): The DDT Effect: The case of Economic Growth, Public Debt and Democracy Relationship.

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Abstract

This study contributes to the research on the economic growth, public debt and democracy relationship using the case of Ghana. We posit that, (1) the capacity of a country to tolerate higher debt is dependent on the quality of institutions, and (2) the growth enhancing effect of democracy depends on the initial debt levels. The results point to an inverse relationship between the quality of institution and the capacity of the country to tolerate higher debt. Further, the growth enhancing effect of democracy is crucially dependent on the initial debt-to-GDP ratio. Several robustness checks conducted confirmed these results.

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